How do I take distributions from his twice-inherited IRA?


Q. My mother-in-law had an IRA from which she was taking distributions. She passed away and my wife became the beneficiary and took a few distributions before she died. Both died before 2020. I became the beneficiary of my wife’s inherited IRA of which I took a distribution once based on my wife’s life expectancy. I did not take a distribution last year based on the SECURE Act. This year I am confused as to what to do. Some say I am grandfathered in and remain with the life expectancy of my wife. Others say I now have to take under the 10-year rule. What should I do?
— Beneficiary

A. We’re sorry to hear of your losses.

Let’s start with some background.

Under the Setting Every Community Up for Retirement Enhancement (SECURE) Act, there were changes made to how people had to take distributions from inherited IRAs.

Prior to the change, anyone who inherited an IRA could implement a so-called Stretch IRA, said Atiq Ahmed, an Enrolled Agent and owner of Edison Tax Group in Edison.

“In a Stretch IRA, the beneficiary leverages the IRA’s tax deferral by taking no more than the Required Minimum Distributions (RMDs) for a number of years,” he said. “The SECURE Act changed this. The beneficiaries who inherited IRAs must be fully distributed within 10 years after the original owner passed away.”

The IRA distributions can adhere to any schedule, but the IRA must be fully distributed by the end of 10 years, he said. If the beneficiary is unable to distribute the IRA on time a penalty of 50% is assessed on the amount that was supposed to be distributed but wasn’t.

But surviving spouses who are IRA beneficiaries are excluded from the 10-year rule, he said. They have the same option they had before the SECURE Act.

In most cases for non-spouses, Ahmed said, the inherited IRA must be fully distributed within 10 years after the original owner passed away after 2019.

But any beneficiaries who inherited the IRA prior to 2020 are grandfathered and get to continue to benefit from a Stretch IRA.

“If you became a beneficiary before 2020, then you can take RMD from the inherited IRA based on your life expectancy,” he said. “In this scenario, you can continue the same RMD schedule that was in effect. Additionally, you have the option to take a distribution of more than the RMD at any time.”

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This story was originally published on Jan. 4, 2022. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.